Britain, EU members continue talks aimed at avoiding 'Brexit'

British referendum on remaining in EU could come as soon as June

British Prime Minister David Cameron arrives at the EU council headquarters in Brussels on Friday for the second day of a European Union leaders summit addressing the talks about the so-called Brexit and the migrants crisis. (Yves Herman/Reuters)

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British Prime Minister David Cameron pushed a summit into overtime Friday after a second day of tense talks with weary European Union leaders unwilling to fully meet his demands for a less intrusive EU.

The summit that opened Thursday is seen as a pivotal moment for the 28-nation bloc and key stepping stone to a British referendum on EU membership that could come as soon as this summer.

The EU is proud of its decades of integration among once-enemy nations across Europe but at the summit in Brussels, Cameron and other EU leaders staked out firm positions — in part to show voters back home that their interests are being defended.

"We've made some progress, but there's still no deal," Cameron said on three hours of sleep early Friday. "We're going to do some more work — and I'll do everything I can."

"Make or break summit"

The effort stretched into Friday night which several contentious issues still open.

"This is a make or break summit. No matter how long it takes," said an EU senior official, who asked not to be identified because of the sensitivity of the talks.

An EU-wide "English breakfast" meeting to address Cameron's concerns and hopefully clinch a deal was first delayed until lunch, then to late afternoon and then became an "English dinner" at an unconfirmed time.

In the meantime, Cameron met with European leaders, including EU President Donald Tusk, Italy's Matteo Renzi and Polish Prime Minister Beata Szydlo, trying to close the gap on issues including financial governance and welfare benefits.

Tusk has said he is willing to continue meetings through the weekend if necessary. Lithuanian President Dalia Grybauskaite said how long it takes to get a deal will depend on the level of "drama" each leader feels they need.

"But no matter what we do here, no matter what face-lifting or face-saving we perform here, it is up to the British people to decide," she said.

Tension over benefit payments

The draft deal offers guarantees to the nine EU countries, including Britain, that do not use the shared euro currency, that they will not be sidelined, and makes tweaks aimed at giving national parliaments more power.

Most of the tensions surround a relatively minor change: a move to suspend or restrict benefit payments made to workers from other EU countries.

Immigration is an especially sensitive point for British voters, because Britain has attracted hundreds of thousands of workers from Eastern Europe in the past decade, drawn by the prospect of higher-paying jobs. The EU immigrants can also claim child tax credits and other benefits in Britain, which Cameron's government says is straining his budget.

Cameron has proposed reducing one payment — the child benefit, given to all low- and middle-income families with children — to migrants from other EU nations for as much as 13 years. Eastern countries want to limit the change to only three or four years, according to one European official involved in the talks.

Czech Prime Minister Bohuslav Sobotka said the 13-year period "is very long, and it doesn't reflect a measure that is meant to have a temporary character."

Cameron has also run into unexpectedly firm resistance from France on financial regulation. French President Francois Hollande insisted Friday that Britain should not be given any "right of veto or blockage" and that all EU countries should have rules limiting speculation and avoiding new financial crises.

French President Francois Hollande gets into his car at the conclusion of an EU summit in Brussels on Friday. 2016. European Union leaders are holding a summit in Brussels on Thursday and Friday to hammer out a deal designed to keep Britain in the 28-nation bloc. (Geert Vanden Wijngaert/Associated Press)

The 19 EU countries that share the euro currency worry that protections for Britain and the eight other non-eurozone nations would offer unfair advantage to Britain's financial centre, the City of London.

Hollande also warned that too-generous concessions to Britain could prompt other countries to seek special rules, too.

Belgian Prime Minister Charles Michel said he was pushing for the deal to include a "self-destruct" clause, so if Britain votes to leave the EU, "the issues discussed evaporate and cannot be used as a basis either for talks with the British or with others."

Despite the tensions, EU leaders ultimately want Britain, a major world economy, to stay in the bloc — a point argued Friday by Dutch Prime Minister Mark Rutte.

A British exit "would be bad news for the EU — but also for the U.K. It would end up as a mid-sized economy somewhere in the middle of the Atlantic Ocean," he said.

Even if Cameron wins a deal, the referendum in Britain is expected to be close and hard-fought. Opponents have said his demands of the EU are too weak.

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